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I’m too young for insurance – you are not actually bullet-proof

If you are under 35, do you have car insurance? Maybe, but maybe not. If you do have car insurance, does your car earn you money? Do you have protection for your greatest asset? What is your greatest asset? [spoiler – it is not your car!]

Key Points:

  • Do you insure your car? Maybe, but maybe not
  • Types of cover for the under 35s
  • Better to be too early than too late

 

Under 35 years old.

So, let’s take a guess at you. You are not 35 yet, and though you may have a long-term partner you are not yet ready to plunge into the world or marriage, house and kids. Perhaps you are still renting with mates. You don’t have a huge amount of debt, although if you die, your estate (and by extension, the people you leave behind), will be responsible to pay your debts for you. Your Student Loan (if any) doesn’t count as that is cleared upon death.

For that quick assessment, you probably don’t need much life cover. Perhaps enough to cover the funeral if you don’t have debt. If you do have debt, someone else will have to pay that, so you might want to have enough life insurance to cover that too.

You insure your car. Great, why don’t you insure your income-earning ability? Is that worth it?

If you are munted, who pays for you while you get better?

What if you don’t get better?

What if you are munted for the rest of your life. Then what?

Do you think that only old people get cancer/stroke/heart issues/MS…? You only feel bullet-proof, but (another spoiler alert) you are not actually bullet-proof..!.

Types of cover if you’re under 35

We’ve discussed life insurance at the top. But what about ‘living insurance’? This is where you have a ‘health event’ and you survive. You can use different types of personal insurance products to help pay your rent and expenses. These might be in the form of a lump sum payment, such as Trauma care, or Total and Permanent Disability. You may also qualify for monthly paying benefits, like income protection or other income replacement products.

Unlike lump-sum benefits, Income Replacement needs higher financial and medical history. If you are a contractor, it may be harder to prove your income is stable.

Think about levelling your policy. You can save thousands of dollars (no, that is not a typo). You will thank me when you are 60…! Levelling your premiums is a little like ‘fixing a mortgage’, where the repayments are same over the years.

Health & Medical cover? This might be good for you. If you are really worried about cancer cover and stuff that you cannot get on the public system, these products can be good for you. If you have savings, have an excess on this type of policy. The bigger your excess the smaller your premium. Unfortunately, you cannot level this one – the cost will go up each year.

Insurance. Better to be too early than too late

If you have a choice about getting protection now or waiting, get it now. You can roll the dice of life, but the odds are against you.

  • 68% probability of getting trauma event between 30 – 70 years old
  • Of all long-term off work people, only 20-25% are on ACC
  • 32% of injured people take longer than 10 weeks to return to work

 

You may be one of the lucky few that I come across, who’ve not experienced any loss of income due to unfortunate health events. Maybe. But between now and 70, you have an increasing probability of having a significant health event that impacts your income. That is probably a risk that you don’t want to take. Probably.

Dominic Bish

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